Can I protect my home from care fees?

The number of over 65s needing 24-hour care will rise to over 13 million by 2035, according to a report published in The Lancet Public Health.[1] Our population is aging. In 50 years’ time there will be more than 20 million people aged 65 plus.[2] As we get older, we are more likely to suffer from disabilities and chronic health conditions so subsequently we need more health and personal care. That’s why it is important to plan ways to finance any future care fees as early as possible.

What is the average cost of care?

There are different kinds of care to suit different levels and types of personal and health needs, these include:

  • Home care (including live-in care)
  • Sheltered accommodation
  • Care homes
  • Nursing homes (like care homes, nursing homes provide 24-hour assistance, but residents’ care is supervised by a registered nurse)

Within each category there are various options to choose from so costs vary considerably. Costs also vary from area-to-area. Care in your own home costs on average £15 an hour (and so the cost per year will depend on care needs),[3] and residential care ranges from £27,000 - £39,000 per year, increasing to £35,000 - £55,000 if you need specialist nursing. The government expects you to pay some or all of the cost of your care.[4]

Your local council will send a care specialist to your house to carry out a care needs assessment to find out which care is best for you, and then they will carry out a financial means test to calculate your contribution.

What is a care needs assessment?

A care specialist from your local authority will visit you to find out what your individual care needs are and the best way to help you. It’s important to be very honest during your assessment. The Care Act 2014 says that the local authority must take your wishes into consideration when making decisions that affect you: “The authority must take all reasonable steps to agree how needs should be met with the person concerned.”[5]

Here are some examples of support your local authority might suggest:

  • Adaptations to your home such as a walk-in shower or stair-lift
  • Equipment such as a wearable alarm or bed sensor
  • Personal help from a care worker to help you get dressed, washed or take medication
  • Meals on wheels
  • Residential care or sheltered accommodation
  • Nursing home

You can ask a family member or a friend to stay with you during the assessment. If this person has been looking after you as an unpaid carer then they can ask the local authority for a separate carer’s assessment to determine whether they need any help in carrying out their responsibilities to you. They might also be entitled to receive carer’s allowance.[6]

You can apply for a needs assessment through your local council social care department.[7] If you need assistance with your application, your nearest Citizens Advice Bureau will be able to help you. If you need initial guidance about planning for care, QualitySolicitors can also help and offer a Free Initial Assessment. We know that health and social care is a unique area and not every issue will need legal involvement; if we believe that there is another option, we will ensure that we point you in the right direction.

The Care Act 2014 makes it clear that the local authority must not let red tape get in the way of providing care for you as soon as possible: “The authority should act promptly to meet people’s needs. The lack of a needs or carer’s assessment or a financial assessment for a person must not be a barrier to action. Neither is it necessary to complete those assessments before or whilst taking action.”[8]

How much money will I have to contribute to my care fees?

Following your care needs assessment, the local authority will carry out a financial means test to determine your contribution to your care. The means test will take into account your income and savings and, depending upon circumstances, your property.

If you need care in your own home you will have to pay the full fees (be self-funded) if your capital is over £23,250. If it is between £14,250 and £23,250, your local authority will contribute. If you have less than £14,250, the assessment will take into account your eligible income. Eligible income is any money that doesn’t come from disability benefits and pensions. The local authority must leave you with £189 a week if you are single and above pension credit qualifying age. This is called the Minimum Income Guarantee.[9]

It’s worth noting that there are non-means tested benefits you may be able to claim to help pay for care in your own home such as Attendance Allowance.

If you need to go into residential care temporarily, you will have to contribute most of your eligible income and you will only be left with £24.90 a week (your personal expenses allowance).[10] However, if your needs are mostly health-based, the NHS may fund some or all of your care. You will need to apply for an NHS continuing healthcare assessment through your GP, social worker or care home manager.[11]

Should you need to go into residential care permanently, you will have to sell your property unless it is occupied by a member or ex-member of your family (that includes former partners, unless they are estranged from you). Your property will be assessed on its current market value less any loans on it and minus 10% for selling expenses.

What’s the best way to pay for care home fees without selling my property?

If you plan in advance, there are a number of steps you can take to finance care home fees without having to necessarily sell your property. 

1. Explore other payment options

This can include:[12]

  • Care annuity: This is an insurance policy which you can use to pay for long-term care.
  • Deferred payment schemes: Local authorities offer these schemes as a flexible way for people to pay for long-term care. 
  • Equity release: You release equity in your home to pay for care fees.  However, there are significant risks so always seek professional financial advice first.
  • Rental income: You can rent out your own property if it generates enough income to pay for residential care rather than selling it.

2. Make a financial gift to your children

This is the first idea that occurs to many people. However, treat this option with caution. You need to be very careful not to fall foul of Deliberate Deprivation of Assets rules. That’s when a local authority decides that you have deliberately reduced your capital to avoid care fees. They could argue you have so done so if:

  • You have gifted away assets
  • You have spent large amounts of money yourself prior to your care needs assessment
  • You have sold an asset for less than it is worth

When a local authority believes somebody has deliberately reduced their assets, they will take action to recover their costs which can put both the person and their children in a terrible financial situation.

You can give your children large financial gifts as long as it’s clear your motivation is not to avoid care fees. That means giving away smaller amounts of money when you are young and healthy and there’s no prospect of you needing care in the near future. However, there is no cut-off ‘safe’ point for you to do this. You also need to consider the financial risks and implications involved in reducing your capital.

3. Set up an asset protection trust

This is the best way to protect your assets from care home fees to preserve your loved ones’ inheritance. You will need to appoint trustees (usually family members) to manage the trust and carefully explore the different kinds of trusts available. Speak to one of our care solicitors if you’re considering this option and we can provide tailored advice for your situation.

What are my asset protection trust options?

Protective Property Trust

When spouses or civil partners own a property in joint names, they can protect half of their home from care fees by setting up a Protective Property Trust. The value of half the home is ring-fenced by the trust when one partner dies. The surviving partner keeps their half of the house, whilst the other half is held in trust. The half that is held in trust will not be counted by the local authority towards the surviving partner’s care home fees. So a house that’s worth £200,000 on the day of the first partner’s death will only have £100,000 considered for home care fees.

The other advantage of a Protective Property Trust is that the surviving partner still lives in the house - in short, their life remains the same. The trust allows the surviving partner to sell the house if they want to and invest the money in a new property, or to have the proceeds of the sale outright if needed.

When the surviving partner dies, the property kept in trust is passed on to the beneficiaries set out in the Will.

Life Interest Trust

A Life Interest Trust works in a similar way to a Protective Property Trust in that one half of the property is ring-fenced off after a spouse or partner’s death so it will not be liable for the surviving partner’s care home fees. 

One key difference is that a Life Interest Trust allows you to put part or the whole of your estate into trust and not just your property. Just as with a Protective Property Trust, you choose someone, usually a partner or spouse, to benefit from the trust whilst they are alive. This beneficiary will have the right to live in the property and also the right to receive an income from the trust assets. 

The underlying capital in the trust is protected for all the Will beneficiaries and will pass to them on the death of the second partner.

Interest in Possession Trust

These trusts are very similar to Life Interest Trusts except that the beneficiary is entitled to receive income from the moment it is produced. 

Take professional advice

Sadly there is no way to avoid paying care home fees, but the good news is that with careful planning you can take steps to protect your assets.

When deciding to take out an asset protection trust it’s important to seek professional, impartial advice. There are many options available to you – we have only skimmed the surface here. Each option has benefits depending upon your personal circumstances.

QualitySolicitors will discuss with you the best ways to protect your assets from expensive home care fees, reducing your financial worries and protecting your hard-earned money for your loved one’s future. Contact us today to see how we can help on 08082747557.

 

[1] The Express, Over-65s needing 24-hour support to rise by a third 
https://www.express.co.uk/life-style/health/1011020/elderly-over-65s-social-care-demand-increases

[2] Office for National Statistics, Living Longer: how our population is changing and why it matters https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/livinglongerhowourpopulationischangingandwhyitmatters/2018-08-13

[3] Age UK, Paying for homecare 
https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-homecare/

[4] UK Care Guide, Care Home Fees & Costs in the UK 
https://ukcareguide.co.uk/care-home-costs/

[5] Department of Health, Care and Support Statutory Guidance: Care Act 2014, section 5.9 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/506202/23902777_Care_Act_Book.pdf

[6] Age UK, Care needs assessment
https://www.ageuk.org.uk/information-advice/care/arranging-care/care-needs-assessment/

[7] Gov.UK, Apply for a needs assessment by social services
https://www.gov.uk/apply-needs-assessment-social-services

[8] Department of Health, Care and Support Statutory Guidance: Care Act 2014, section 5.11 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/506202/23902777_Care_Act_Book.pdf

[9] Age UK, Do I have to sell my home to pay for care?
https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/do-i-have-to-sell-my-home-to-pay-for-care/

[10] Age UK, Do I have to sell my home to pay for care?
https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/do-i-have-to-sell-my-home-to-pay-for-care/

[11] NHS, Benefits for over-65s
https://www.nhs.uk/conditions/social-care-and-support-guide/money-work-and-benefits/benefits-for-over-65s/

[12] UK Care Guide, Avoiding home care fees 2019 
https://ukcareguide.co.uk/avoiding-care-home-fees/

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